NLRB Limits Companies’ Liability for Franchisee Labor-Law Violations

Labor News

The original NLRB decision had opened the door wider for workers at franchises, like some McDonald’s locations, to unionize. PHOTO: RICHARD LEVINE/ZUMA PRESS

Reprinted from The New York Times by Reuters on February 25, 2020.

A US labor board on Tuesday finalized a rule that will make it more difficult to hold companies liable for unlawful labor practices by franchisees and contractors, reversing a more worker-friendly Obama-era standard criticized by business groups.

The rule by the National Labor Relations Board (NLRB), which was first proposed in September 2018, requires that companies have direct control over the working conditions of franchise and contract workers in order to be considered their “joint employers.”

The issue is important for franchisors like McDonald’s Corp or Burger King Corp and the many companies that utilize staffing agencies, because joint employers can be made to bargain with unions and found liable for violations of the U.S. law that governs union organizing.

In a 2015 decision, NLRB members appointed by President Barack Obama, a Democrat, said indirect control over working conditions could create a joint-employment relationship. …